Question

Stella and Matt went to the mall. While there they passed a Vans store, Nike’s store, New Balance store, and Adidas store. Matt commented that there was really a large number of sellers and noted that there seemed to be many buyers as well. What kind of market competition is represented by these stores?

Answer 1

Answer:

Monopolistic Competition

Explanation:

In Monopolistic Competition, there are many buyers and sellers. Firms do not have full control over prices, but take the market prices as a benchmark, and can charge a slightly lower or higher price depending on the product they offer.

Products are not perfect substitutes, they have some grade of differentiaton, and buyers have access to information, and can easily compare products and suppliers.

This type of market it's typical of crowded, competitive economic sectors such as retail, including clothing stores, restaurants, and shoe stores.